https://www.solo401k.com No Further a Mystery

People are rushing to complete their 2013 tax obligation year return as well as asking yourself just how they can save tax for the 2014 tax obligation year. The Solo 401( k) is an approach that few make use of. The Solo 401( k) is not a new type of 401( k) plan as well as has the same guidelines as well as needs as any other 401( k) strategy.

Just how much can one contribute? The business proprietor wears two hats in a 401( k) strategy: staff member and also employer. Contributions can be made to the plan in both abilities. The owner can elect to defer as much as one hundred percent of settlement (additionally called earned income for the freelance) as much as $17,500 for both 2013 and also 2014 tax years. If he is age 50 or over, there can be an extra $5,500 (called the "catch-up" contribution) to make the overall $23,000 each year.

The second part is the employer contribution of up to either 25 percent of the compensation defined by the strategy, generally salaries, or a different calculation for the self-employed individual. One specifies one's settlement as "made earnings", which is net earnings from self-employment after subtracting fifty percent of one's self-employment tax obligation (relied on Arrange SE). Then 20 percent of this number is what the employer contribution is. The total of both the employee salary deferral as well as the employer contribution can not exceed $51,000 for 2013 and also $52,000 for 2014. If the person is age 50 or over, there can be an added $5,500 "catch-up" payment, making the overall maximum contribution to the Solo 401( k) plan $56,500 for 2013 and also $57,500 for 2014.

Example of a Schedule C, unincorporated small business, where the proprietor goes to the very least age 50 and the net earnings in 2014 is $200,000:

If one takes 20 percent of $190,067.85, the optimum employer revenue sharing contribution is $38,013.57. In comparison, the contribution restriction for an EASY Individual Retirement Account plan would certainly be $20,035.96 or $38,013.57 for a SEP IRA strategy. One can contribute considerably more to a Solo 401(k) instead of these various other two company IRA strategies, and also definitely a lot more than the $6,500 restriction for a conventional specific IRA plan.

Due dates: One must develop your Solo 401(k) strategy by December 31, 2014, if you wish to make a payment for tax year 2014 as well as lower taxable income. The payments must be moneyed by your tax-filing deadline. If one declare the 6-month www.solo401k.com expansion prior to the April 15, 2015 deadline to submit one's 2014 tax return, one would have up until October, 15, 2015, to make the money payment.


The Solo 401( k) is not a brand-new kind of 401( k) strategy and also has the exact same guidelines and also requirements as any type of various other 401( k) strategy. The business owner wears two hats in a 401( k) plan: staff member and also company. If the individual is age 50 or over, there can be an additional $5,500 "catch-up" contribution, making the overall optimum contribution to the Solo 401( k) prepare $56,500 for 2013 as well as $57,500 for 2014.

One can add substantially even more to a Solo 401(k) instead of these various other two employer Individual Retirement Account plans, as well as absolutely a lot even more than the $6,500 limit for a typical individual IRA strategy.

Target dates: One must establish your Solo 401(k) strategy by December 31, 2014, if you desire to make a contribution for tax year 2014 as well as minimize taxed revenue.